1990, Arco International made a technical review of the blocks offered
in the Oriente of Ecuador, and offered a bid on Block 10. Arco was successful
in its bid, and became operator with a 60 percent interest, and had Agip
as partner, with 40 percent.
Geologic studies and seismic interpretation
indicated that the 500,000 acres of Block 10 had four significant structures:
- A very large compressional anticline on
the west side.
- Three low relief intra-basinal structures.
The largest feature, the Villano
anticline, had a Royal Dutch/Shell dry hole on the crest.
Arco's review indicated that that
well, the Shell Villano #1, was the final wildcat drilled by Shell in
an exploration play that resulted in a series of unsuccessful Shell wildcats
drilled along the eastern margin of the Andes in the 1950s. The Shell
Villano #1 was abandoned after drilling into the top of the objective
Hollin sandstone, and recovering a short core of sandstone with stiff
Arco exploration manager Robert
Olson suggested that the Shell wildcat may have only penetrated a thin
stringer of tar-bearing Hollin sandstone, above the main Hollin sandstone.
Olson thought that the Villano structure deserved another test - a redrill
of Villano #1.
To minimize any damage to the rain
forest, Arco decided to restrict its exploration to helicopter-supported
activities. A wildcat test twinning the Shell Villano dry hole would be
very expensive. All the wildcat costs would buy 300 feet of new hole penetration
in the twin well.
As a former Shell Oil executive,
I was dubious that Royal Dutch/Shell had overlooked a major field, but
I agreed that the well evidence was unclear. Olson's exploration team
analyzed the basin's source rocks and burial history, and documented that
light oils could be expected to be generated and available in the basin.
Arco decided to drill its first
well on Block 10 to test the Moretecocha structure, a simple, low relief
closure that was adjacent to the deepest part of the basin. Moretecocha
was located just down-plunge from the Villano structure.
If the Moretechoca closure were
filled to spill with oil of reasonable gravity, it would be attractive
by itself. More importantly, a Moretecocha success made the much larger
Villano structure much more likely to have received a charge of moderate
Arco drilled the Moretecocha closure
in 1991 and found about 40 million barrels of 24-gravity oil in the Hollin
sandstone. More importantly, the Moretecocha closure appeared to be filled
to the mapped spill point. Any excess charge should have migrated laterally
and up-dip to Villano.
The tar sand originally encountered
by the Shell at Villano #1 now seemed to be anomalous.
Bob Olson again recommended twinning
Shell's Villano #1; this time I agreed.
The Arco/Agip Villano #2 was spudded
in 1992 as a twin to the 1950s Shell Villano #1, and the Villano #2 found
a thick porous Hollin sandstone containing 22 degree API oil. The Arco
Villano #2 has a flow potential of over 8,000 barrels of oil per day.
Villano field appears to have recoverable
reserves of at least 200 million barrels of oil.
Development of Villano field has
been extremely difficult - for political, not technical reasons.
Arco tightly controlled the field's
development to protect the environment, even to adopting a "no road" policy
to minimize incursions into the development area. The surface footprint
for field development is only six acres, but it accommodates nine developments
and two water injector wells - and necessary facilities.
Some local groups insisted on roads
to assist their marketing of produce and timber; other local groups insisted
on no roads, with the area to be left as a nature preserve.
Some groups wanted schools and
medical facilities; some groups wanted contributions to environmental
With numerous groups claiming to
be the exclusive representative of the local people, and with a central
government with legal responsibility but with little local authority,
development activity was excruciatingly slow, difficult and expensive.
And what did I learn from this
- I think I learned to keep an open mind to
- I think I learned that you can change the
perception of risk by lessening technical uncertainties.
- I think I learned that a weak central government
can become a major business risk.
Now, was that the way it really
Perhaps not - but
that's the way I remember it.
And Now, The End?
A year ago, I promised to write
a dozen articles for the EXPLORER with the purpose of using history of
discoveries to extract exploration lessons.
There are another dozen stories
I could tell, but I am more interested in hearing your stories and learning
Please prepare your histories of
discoveries for possible publication in the EXPLORER, attention Vern Stefanic,
and keep the memories rolling.
Remember that wisdom lets you make
different mistakes instead of repeating old mistakes.
I'm going to stop writing and start